Modern secondary education and economic performance: the introduction of the Gewerbeschule and Realschule in nineteenth-century Bavaria

Do new school types focusing on practical and business-related
knowledge lead to increased economic performance? To analyze this
question, this paper examines the introduction of two types of
modern secondary education, the Gewerbeschule and its successor,
the Realschule, in nineteenth-century Bavaria. Since opening of
these schools is arguably endogenous – as it were mainly the
prosperous, big cities that opened one – the estimated treatment
effect capturing the economic influence of the
Gewerbeschule/Realschule will lead to biased results. To alleviate
this bias, I adopt propensity score matching to compare relatively
alike counties with and without these schools. Using historical
county-level data on business formations, tax revenues, employment
structure, and patent holdings, OLS regression analysis shows that
the opening of a modern secondary school is in general positively
associated with economic performance several years later.